European shares reversed early losses and rose on Wednesday, starting the new quarter on a positive note, helped by data showing manufacturing activity across the euro zone accelerated faster than previously thought last month.

Markit’s final March manufacturing Purchasing Managers’ Index (PMI) was at a 10-month high of 52.2, beating a preliminary reading of 51.9, adding to signs the bloc’s economy is recovering.

Shares in Swiss chocolate maker Barry Callebaut surged 7.2 per cent after it reported higher half-year sales and profits, as cost cuts helped counter the impact of the surging Swiss franc. It also confirmed its mid-term targets subject to currency swings.

Neopost bucked the trend, dropping 7 per cent after posting disappointing results.

At 0806 GMT, the FTSEurofirst 300 index of top European shares was up 0.4 per cent at 1,590.61 points. The benchmark index surged 16 per cent in the first quarter.

“The overall trend is still positive; there aren’t any signals of an imminent sell-off. The idea is still to buy the dips,’’ said Jean-Louis Cussac, head of Perceval Finance.

The market initially fell in the first minutes of trading, with investors rattled by surveys of China’s factory and services sectors showing stubborn weakness in the world’s second-biggest economy in March.

European shares slipped on Tuesday after their recent sharp rally but retained big gains for the quarter, with Germany’s DAX posting its strongest first-quarter performance since its creation in 1988.

The DAX surged 22 per cent in the last three months, while the FTSEurofirst 300 index of top European shares climbed 16 per cent, as investors bet the drop in the euro will spark a recovery in the region’s economic growth and corporate profits.

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